The CFTC chairman (Rostin Behnam) requested that its agency be given regulatory function over the crypto market at his latest appearance before the Senate agriculture committee.
Risks, Innovation, And Regulation
The focus of the Senate’s Wednesday’s discussion was on the “risks, innovation and regulation of the crypto industry,” during the session (which involved all financial regulatory agencies), Behnam opined that the issues with the crypto sector would not be solved until there is a proper authority over activities going on in that industry.
While Behnam isn’t seeking that CFTC should be the only agency performing this role, he suggested that there should be a limit to the number of agencies performing this role. The Senate hearing came a day after the DoJ disclosed its largest financial seizure ever – A recovery of $3.6B worth of BTC hacked from Bitfinex exchange six years ago.
The CFTC started operating nearly five decades ago, and its primary responsibility is to lessen fraud and manipulation in the derivatives market. If the SAC grants Behnam’s request, the CFTC’s responsibility will extend beyond regulating the derivatives market. But it would be regulating cash markets for specific crypto sectors.
Part of Behnam’s introduction at the hearing on February 9 says, “digital assets and DeFi technologies are no longer what may happen in the future; they are happening right now. Hence, we are willing to help and add this responsibility of regulating the crypto market to our current roles of regulating derivatives markets. We are unhappy that the lack of regulation of the market is negatively impacting the economy and even the market participants even if they don’t know it.”
Eliminating Cyber Threats
One of the senators asked Behnam to share measures it intends to take and protect investors. The CFTC chair said, “we share tools and resources with the department of homeland security to eliminate cyber frauds. Hence, we intend to continue in this line once we are approved as one of the regulators of the crypto industry.”
According to Behnam, the rapid growth of the crypto industry requires greater regulatory authority. He further said that the CFTC’s primary regulatory objective would be to analyze direct registrations critically. However, it can also skim through the principles behind the registration and the cyber protection policies.
While the sec can fund itself, the CFTC is externally funded to the tune of $300m. Thus, Behnam asked that the Senate increase its funding by $100m to enable it to carry out its regulatory role over the digital assets properly.
The committee chair, Senator Debbie Stabenow, responded saying, “it would be in our best interests to take action immediately instead of waiting till the next crisis. There is a need for Congress, regulators, and other relevant authorities to discuss and develop an ideal framework for investor protection and ensure that our market remains fair, competitive, and transparent. Thus, I am convinced that the CFTC will play a pivotal role in making this happen.”